How to Budget for Your Oklahoma Life Insurance Premiums
According to reports, 50% of Americans overestimate the cost of term life coverage by more than triple.
If you're thinking of taking out an Oklahoma life insurance policy, this is good news. You might find that it will cost you a lot less than you initially assumed.
However, before you take out a policy, it's important to budget for your premiums. Even if life insurance is far cheaper than most of us realize, it's still an additional financial responsibility to meet each month.
By practicing savvy budgeting you can ensure you're able to easily meet this payment, and ensure the wellbeing and security of your family for decades to come.
Keep reading to find out how to conduct smart financial planning for your insurance policy.
Figure Out How Much Life Insurance You Need
The first step to budgeting for an insurance policy is figuring out how much coverage you need. Some insurance providers offer up to $10 million in coverage. However, the amount that you can qualify for will depend on your income and total net worth.
One general rule of thumb is that you will need roughly 10-15 times your income in life insurance coverage. However, this is just a rough estimate. To get a clearer idea of how much coverage you need for your family you can utilize the DIME method.
The Dime Method
DIME stands for Debt, Income, Mortgage, and Education. To work out your coverage needs using the DIME method you will need to add up:
- Any outstanding debts
- Your income multiplied by the length of time your family will be dependant on it
- The outstanding balance on any mortgages
- Education costs for your children
Once you have tallied up these numbers you will have a clearer idea of your coverage needs.
To make things simple, we also have a coverage calculator you can use to add up these areas and estimate what value your life insurance policy should be.
Evaluate Your Monthly Budget and Adjust Your Spending
The next financial planning step you need to take is evaluating your current budget and foreseeing how your life insurance policy premiums will fit into it.
According to reports, only 39% of Americans can afford a $1,000 emergency. Although a life insurance policy probably won't cost you nearly this much, it can still be a challenge fitting it into one's monthly budget.
If you already have a budget for your monthly income and expenses, go through it and make sure it's up to date. Check to see how your actual spending habits compare with your drawn-up budget and adjust if need be so you can get an accurate idea of how you spend your money each month.
Once you have a clear idea of all your expenses, analyze them and see what's left over for your life insurance premiums. If you see that you won't have quite enough for the coverage you need, see where you can cut down on unnecessary expenses.
This might feel daunting at first, but keep in mind that it's better to reduce non-essential expenditure than to underinsure compromise your family's security.
What's more, once you dig into your monthly expenses, you might be surprised at how much you can save without impacting your lifestyle too much.
Easy Areas to Cut Costs and Free up Money for Your Life Insurance Premiums
If you don't have enough income left over each month for paying your insurance premiums, this can cause your policy to lapse. Because of this, it can be tempting to reduce the amount of money you put towards savings each month and redirect this to your policy.
This isn't ideal, however, because retirement annuities and investments are just as important for your family's financial security as your life insurance policy.
Instead, take a look to see if you can reduce expenditure in the following areas.
Subscriptions can be a sneaky expense that siphon a surprising amount of money out of your account each month. It might not feel like overspending to take out a $20 subscription here and there. However, these small amounts can start to add up.
What's more, you may find that you don't even use that many of your subscriptions. That New York Times subscription you took out last year? How many times have you actually utilized it?
Other under-utilized subscriptions can include:
- Gym memberships
- Cable television
- Secondary streaming services
If you make a point to add up your subscriptions and cancel the ones you don't use, you might find that you can easily free up a couple hundred dollars each month.
Vacations are important for rejuvenating and creating memories. However, vacations can also be expensive.
Evaluate your vacation spending and see if there are ways you can save in this area.
Eating out is another area that can ramp up your expenses unnecessarily. See if you can cut back on restaurant meals, and focus on preparing food at home. While you're at it, get the whole family involved and make it a group activity.
If a lot of your income is going to debt repayment, evaluate your debts and see which ones command the highest interest. Things like credit cards charge notoriously high rates.
Try to take measures to eradicate the high-interest debt first. Once this is done, you'll be left with more money each month to put towards your life insurance policy.
Shop Around and Compare Quotes
Besides figuring out how life insurance premiums can fit into your budget, you should also take some time to shop around.
If you invest some energy into comparing quotes and options, you will be able to snag a better Oklahoma life insurance deal and make your policy more affordable.
Are You in Need of an Oklahoma Life Insurance Policy?
Choosing to take out life insurance is a smart move. It secures the future of your family, which means you can sleep easy at night knowing that should something happen to you they will still be taken care of.
However, before you take out a policy, it's essential that you do the necessary budgeting to make sure you can easily cover the monthly premiums.
Are you looking for Oklahoma life insurance deals? If so, we can help.
We provide you with competing offers and quotes so you can get the best value for your money, all within a few clicks. Head on over to our life insurance page today and enter your zip code to get the best Oklahoma life insurance quotes.